$SD: Strategic Buyback and Rewards Capping

Stader recently unveiled The Tokenomics Reboot - a 4-step token recalibration exercise designed to align the supply, circulation and utility of the SD token as it targets a 10x growth trajectory. The first step - the SD Mega Burn, incorporated to resolve concerns around SD’s high FDV/low float has already passed the DAO vote with 99% quorum. Under this, 20% of the 150 Mn $SD supply shall be burned on 25th June resulting in a new optimized token supply of 120Mn $SD.

We are now bringing forth the next major reveal of the SD Tokenomics Reboot - strategic buyback & rewards capping. A significant part of any tokenomics is to sustainably manage the circulating supply of its token. Stader is hence proposing a regular strategic buyback of $SD and incorporating capping of rewards for long-term sustainability of its tokenomics.

Stader’s Business and Revenue Growth
Over the last 2 years, Stader has seen phenomenal growth as a business. It is the largest LST on Polygon and Hedera and is one of the fastest growing LSTs on Ethereum. This growth has helped us strengthen our business finances and has increased our ARR to $2Mn.

Quarterly $SD Buyback
Going forward, Stader proposes that 20% of its revenue every quarter shall be deployed to purchase SD from the market. This shall create a regular “sink” for pulling $SD out of circulation. As TVL and revenue scales further, the quantum of funds deployed shall increase enabling us to absorb that much more $SD.

Maintaining the current TVL gives us an annual allocation of $400,000 deployed towards this program. Multiple options are being considered for the deployment of $SD thus procured. Some of them include the $SD being burned or used to provide liquidity to LPs or being delegated to rewards pools. A detailed proposal shall be released to the community seeking their thoughts and the final ḍecision will be subject to governance voting.

Rewards Capping
Stader also proposes capping the $SD being allocated towards rewards emissions across various products. The intent is to ensure that the growth is sustainable in nature with rewards emissions increasing at a slower rate as business matures and the TVL scales up.

Initial estimates project that a 50% increase in rewards can support at least 5x growth as business matures. With rewards being further optimised and greater value accrual to SD, a much higher TVL can be supported. Thus, the TVL shall scale at a rate significantly higher than that of rewards. The exact quantum of rewards committed for growth will be subject to DAO governance and voting.

Call for feedback
The above measures demonstrate a sustained commitment to regular optimization by limiting SD entering circulation. These measures contribute to the long-term success of Stader and contribute to the SD growth flywheel as value accrual amplifies.

We welcome your thoughts on the above proposal so as to incorporate the same and submit an optimal proposal for voting by the DAO.

Buyback and using that for rewards is perfect, eliminating new tokens entering circulating supply completely. If any legal concern, then buyback and burn and perhaps giving equal amount in rewards.

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This buyback is a great idea to support the token and show the commitment of Stader. I hope we’ll begin soon as $SD lost 15% last week, it really needs some backing.
We could also work on the ratio between $SD and $ETH as the two have completely different variations. Last week when $SD lost 15%, $ETH lost only 3.8%. When the spread between the two token expands, NOs are under pressure.

Thanks for the proposal, it seems very promsing for the success of Stader.

What about not being 20% a fixed ratio but a minimum and extending the ratiof for buy back mechanism to all revenues discounting Stader operative expenses + a % buffer for treasury safe?

How the buyback would work? daily/monthly or all at full upon every trimester elapses?

I dont have sufficient benchmark on the impact of reducing the rewards in Defi versus the decrease/increase of TVL. I think in case of Stader its not much applicable since the majority of users of Stader are institutionals.